Coalition row breaks out on China FTA

Australia’s Treasurer Joe Hockey, left, shakes hands with Germany’s central bank governor Jens Weidmann as they take their seats for a G20 family photo at the start of the annual IMF-World Bank autumn meetings in Washington on Friday.
Photo: Reuters

Key Nationals have vowed to fight Treasurer
Joe Hockey
’s suggestion an Abbott government could cave in and relax foreign investment rules to seal a free-trade deal with China.

In the United States on Sunday, Mr Hockey appeared to open the door to agreeing to Beijing’s demand that the treatment of foreign investment be no less generous than the $1 billion Australia offered the US in its 2005 free-trade agreement (FTA).

But the Coalition’s policy actually commits it to reducing the threshold to just $15 million in relation to Chinese farmland purchases.

Despite stating he did not want to pre-empt negotiations, Mr Hockey also said: “The $15 million threshold applies to those countries that have not signed a free-trade agreement with Australia. We therefore deal with those on a case-by-case basis’’

The Treasurer’s comments were immediately seized upon by some Nationals as signalling that if China is willing to sign an FTA ahead of a 12-month deadline set by Prime Minister
Tony Abbott
, then Beijing it will get its $1 billion threshold.

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Trade and Investment Minister
Andrew Robb
is involved in extensive consultations with the Liberals junior partner and is still formulating a position to take to federal cabinet.

Mr Robb said FTA negotiations would be considered by cabinet in the near future. “On the question of thresholds it would be wrong to speculate about the negotiating positions we will ultimately take in regard to ongoing FTA negotiations with China, Japan or Korea. Again this is something that will be considered by Cabinet."

Nationals Senator
John Williams
said he was “vehemently opposed" to the Hockey proposition. “China should not be treated the same as the US . . . it’s not our ally; it’s a Communist state," he said.

“I’m concerned that if we sell off the farm, the profits go back to Beijing and do not benefit Australian regional communities which are struggling as it is," Senator Williams added.

Stalemate threatens Abbott’s deadline

In the ongoing FTA negotiations China wants the current threshold of $248 million before investment by its firms must be reviewed by the Foreign Investment Review Board lifted.

The Nationals are also concerned China wants a $1 billion threshold for state-owned enterprises ($0 at present) and “free access for its labour".

Mr Abbott and Agriculture Minister
Barnaby Joyce
reaffirmed the $15 million policy to tighten the threshold during the election campaign in response to public anxiety over Beijing’s increasing investment in Australian farmland.

But Mr Abbott wants to seal all three of Australia’s protracted north Asia free-trade deals within 12 months, including those with China, South Korea and Japan.

The foreign investment threshold is the most challenging sticking point between the two countries in the talks, although Australia is still looking for better access for farm produce and financial, legal and education services.

New life was briefly breathed into the talks when Labor’s last trade minister,
Richard Marles
, offered to lift the investment threshold to $1 billion in late July.

Trade analyst Alan Oxley said there would be “no significant increase in farm exports to the world’s fastest growing food market unless we encourage China to invest".

“It worked with resources, where allowing more investment opened up supply, so why wouldn’t it work with agricultural land?" Mr Oxley said.